Improving Productivity and Labor Cost Management

Improving Productivity and Labor Cost Management

Setting the Scene

Early in 2008 an integrated delivery system in the Midwest made changes at the CEO and COO level. The health system employed 3,000 people and had 220 beds, 200 employed physicians, and 50,000 ER visits. Shortly after the C-level leadership changes, it became clear that significant changes in productivity had to be achieved. Compass Clinical Consulting was retained to make the necessary organizational changes.

Crafting a Solution

Compass consultants began by performing an operational assessment, in which 74 in-depth interviews were conducted with all managers, directors and executives. The following month, results were reviewed, priorities established and specific change initiatives were undertaken. Achievable productivity targets were set for each department. For those departments that had a large gap between their current worked hours/workload unit (WH/WLU) and the recommended WH/WLU, detailed project plans were put in place to change processes, implement tools, and educate managers and employees so they could move to their recommended targets. In addition, a new, transparent, biweekly productivity monitoring report was rolled out, replacing an expensive but ineffective report saving $150K annually.

Seeing the Results

As a result of these combined efforts, the hospital began shedding FTEs at a steady rate of 10 per month. Over the course of 13 months, the hospital had 150 fewer FTEs. Layoffs, however, were avoided. The results were achieved through attrition, improved metrics and tools, improved leadership directives and improved accountability. Overall payroll was decreased through pay practice reform and incremental time management. In all, these reductions resulted in an $8M in savings for the health system.

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